Chapter 7 – Risk in Foreign Trade

Risk in Foreign Trade

  1. Buyer Risk 
    • The seller faces risks relating to non-acceptability, non-payment, quality acceptance, credit risk etc.
  2. Seller Risk
    • The risk that a buyer is exposed to and arises on account of non-shipment of goods by the seller, delayed shipment or shipment of poor quality of goods
  3. Shipping Risk
    • The risk that buyer and seller are exposed to and arises on account of mishandling of goods, abandonment of goods, wrong delivery of goods, delivery of goods at another destination by the intermediary like. shipping company, handling agent, port authorities etc.
  1. Other risk
    • The buyer and seller can face other risks also in international trade that may include the settlement risk, competition risk, price risk, legal risk etc

Also Categorise

  1. Credit Risk
    • Relates to credit worthiness of the buyer
  2. Legal Risk
    • Relates to any amendment in the laws of the sellers or buyer’s country
  3. Country Risk & Political Risk
    • Relates to uncertainty in laws, un certainty in financial position of the countries
  4. Operational Risk
    • Relates to operational issue at both ends or even at supporting organization place
  5. Exchange Risk
    • Relates to adverse movement incurrencies
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